Italian legislation provides that small municipalities may only use central purchasing bodies that conform to only two specific models which are exclusively public, in the sense that no private individuals or undertakings may participate in these central purchasing bodies. In addition, this legislation is considered to confine the activities of the said central purchasing bodies to the territory of the municipalities involved.
Asmel is a company which has been active as a central purchasing body for diverse Italian local authorities. Its shares are held by a consortium comprising private undertakings and municipalities (24%), a private association the members of which include the national association of small Italian municipalities (25%) and the municipality of Caggiano (51%).
On 30 April 2015, the National Anti-Corruption Authority ruled that Asmel could not be classed as a body governed by public law for the purposes of the aforementioned legislation and, accordingly, prohibited it from performing brokerage activities in the field of public procurement and declared that the tendering procedures it had conducted were unlawful.
Asmel challenged this decision, which led the Italian Council of State to refer questions to the Court of Justice of the European Union as regards the compatibility of the aforementioned Italian legislation with EU law.
In its judgment of 4 June 2020 (C-3/19), the Court of Justice started by recalling that, pursuant to Directive 2004/18 (which was applicable in the dispute before the Italian courts), the terms “central purchasing body” are defined by reference to the notion of “contracting authority”, which is defined as “the State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law”. According to the Court, this definition is subject to a broad interpretation and does not require central purchasing bodies to comply with any specific organisational models.
In addition, under Directive 2004/18, Member States are allowed to choose whether contracting authorities may use central purchasing bodies. This directive provides that Member States may stipulate that contracting authorities may purchase works, supplies and/or services from or through a central purchasing body.
As a result, the Court of Justice considered that the only limitation imposed by Directive 2004/18 on the use of central purchasing bodies is that said bodies must be “contracting authorities”. Therefore, Member States enjoy a broad margin of discretion which also extends to the organisational models of the central purchasing bodies.
According to the Court of Justice, this interpretation complies with the principles of freedom to provide services and of opening up to fair competition. Indeed, central purchasing bodies are themselves under the obligation to respect the procedures provided for in Directive 2004/18, which specifically aim to ensure compliance with these principles. In addition, the Italian legislation at issue does not cause any private undertakings to be placed in a more favourable situation than their competitors.
As a result, the Court ruled that the relevant provisions of Directive 2004/18 should be interpreted as not precluding national legislation which limits the organisational autonomy of small local authorities to use a central purchasing body to only two exclusively public organisational models, without the participation of private persons or undertakings.
As to the limitation of the scope of action of central purchasing bodies set up by local authorities to the territory of those authorities, the Court of Justice underlined that Directive 2004/18 does not contain any provision in this respect. Such a limitation would be consistent with the fact that a central purchasing body must qualify as a contracting authority as per the definition recalled above, would not exceed the broad margin of discretion enjoyed by the Member States, and would not place any private undertaking in a more favourable position than its competitors.
Please contact Peter Teerlinck, Raluca Gherghinaru for further information about this case and/or for general legal advice relating to public procurement.